Annual fees on credit cards?

[Ghoshida]

Another view-point to consider while comparing utilities bills to credit card annual fees:

I pay ~ $25 on my monthly cell line. It's a fixed fee for unlimited talk, text, and data. That is, I can get all further benefits without spending a $ more. 

With any AF credit card, the fee by itself does not provide me with an unlimited capability. I must spend "in addition" to the fee to get the benefits. 

Compare Barclaycard Arrival - no AF to the one with AF. You get $200 extra first year, and pay $90 in fees in the second year. So if you hold for 3 years, fees creep up to eat up the extra benefit. 

Okay, so the AF-version has 2% on everything. Let's consider someone having the no-AF and the Cap One Q/S. It took one extra inquiry hit, but now the rewards difference in all non-restaurant, non-travel categories is down to 0.5%. That means, to get back $90 worth of fees, I must spend $18000 a year on non-restaurant, non-travel categories. 

Also, I didn't consider other cards like Freedom, Discover It, and Citi Dividend. When you move parts of your spends to those cards, there is very little left to justify the AF cards, except maybe you can "do away" with holding multiple cards. 

[longtimelurker]

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@Ghoshida wrote:

Another view-point to consider while comparing utilities bills to credit card annual fees:

I pay ~ $25 on my monthly cell line. It's a fixed fee for unlimited talk, text, and data. That is, I can get all further benefits without spending a $ more. 

With any AF credit card, the fee by itself does not provide me with an unlimited capability. I must spend "in addition" to the fee to get the benefits. 

Compare Barclaycard Arrival - no AF to the one with AF. You get $200 extra first year, and pay $90 in fees in the second year. So if you hold for 3 years, fees creep up to eat up the extra benefit. 

Okay, so the AF-version has 2% on everything. Let's consider someone having the no-AF and the Cap One Q/S. It took one extra inquiry hit, but now the rewards difference in all non-restaurant, non-travel categories is down to 0.5%. That means, to get back $90 worth of fees, I must spend $18000 a year on non-restaurant, non-travel categories. 

Also, I didn't consider other cards like Freedom, Discover It, and Citi Dividend. When you move parts of your spends to those cards, there is very little left to justify the AF cards, except maybe you can "do away" with holding multiple cards. 

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Yes, on those type of AF cards.   But ones where you can transfer points to FF programs, get lounge access, get airline credits etc, will, for some, be much more than justified.  

And in the good old days, even something as simple as the BCP: when the supermarket 6% was uncapped, no question at all that the $75 was money well spent.  Those doing MS on the card were getting many thousands of dollars back.

[Ghoshida]

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@longtimelurker wrote:

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Yes, on those type of AF cards.   But ones where you can transfer points to FF programs, get lounge access, get airline credits etc, will, for some, be much more than justified.  

And in the good old days, even something as simple as the BCP: when the supermarket 6% was uncapped, no question at all that the $75 was money well spent.  Those doing MS on the card were getting many thousands of dollars back.

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Absolutely. There must be some kind of justification even for $450 and above AF-cards, and I'm sure there is a customer base for those cards. There were a different time and a different country where I'd have taken a cobranded AMEX Platinum with $100 (equivalent amount) AF - simply because it gave me those privileges and they suited the lifestyle. I enjoyed the occasional business class upgrades and free flights home. 

But comparing those to utilities or other necessary items do not make much sense, especially if the lifestyle needs don't hover in those levels. E.g., even if BCP were to be uncapped now, I might not be able to spend that much in groceries (over and above what I spend through Sallie Mae) to justify the spending. My needs are limited, and so is my lifestyle now. 

[longtimelurker]

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@Ghoshida wrote:

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@longtimelurker wrote:

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Yes, on those type of AF cards.   But ones where you can transfer points to FF programs, get lounge access, get airline credits etc, will, for some, be much more than justified.  

And in the good old days, even something as simple as the BCP: when the supermarket 6% was uncapped, no question at all that the $75 was money well spent.  Those doing MS on the card were getting many thousands of dollars back.

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Absolutely. There must be some kind of justification even for $450 and above AF-cards, and I'm sure there is a customer base for those cards. There were a different time and a different country where I'd have taken a cobranded AMEX Platinum with $100 (equivalent amount) AF - simply because it gave me those privileges and they suited the lifestyle. I enjoyed the occasional business class upgrades and free flights home. 

But comparing those to utilities or other necessary items do not make much sense, especially if the lifestyle needs don't hover in those levels. E.g., even if BCP were to be uncapped now, I might not be able to spend that much in groceries (over and above what I spend through Sallie Mae) to justify the spending. My needs are limited, and so is my lifestyle now. 

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My original reaction was that comparing them makes little sense.  But calling cell service a necessity will also sound strange to some.  But of course, whether a card, or a cell phone, or the latest designer purse is necessary or not depends on your life style.

The BCP won't be uncapped again, but just in case it ever is, the key is to expand your concept of groceries to include little plastic cards marked Visa or MC or Amex, available at most big supermarkets for about $505.95 each!

[Ghoshida]

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@longtimelurker wrote:

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@Ghoshida wrote:

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@longtimelurker wrote:

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Yes, on those type of AF cards.   But ones where you can transfer points to FF programs, get lounge access, get airline credits etc, will, for some, be much more than justified.  

And in the good old days, even something as simple as the BCP: when the supermarket 6% was uncapped, no question at all that the $75 was money well spent.  Those doing MS on the card were getting many thousands of dollars back.

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Absolutely. There must be some kind of justification even for $450 and above AF-cards, and I'm sure there is a customer base for those cards. There were a different time and a different country where I'd have taken a cobranded AMEX Platinum with $100 (equivalent amount) AF - simply because it gave me those privileges and they suited the lifestyle. I enjoyed the occasional business class upgrades and free flights home. 

But comparing those to utilities or other necessary items do not make much sense, especially if the lifestyle needs don't hover in those levels. E.g., even if BCP were to be uncapped now, I might not be able to spend that much in groceries (over and above what I spend through Sallie Mae) to justify the spending. My needs are limited, and so is my lifestyle now. 

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My original reaction was that comparing them makes little sense.  But calling cell service a necessity will also sound strange to some.  But of course, whether a card, or a cell phone, or the latest designer purse is necessary or not depends on your life style.

The BCP won't be uncapped again, but just in case it ever is, the key is to expand your concept of groceries to include little plastic cards marked Visa or MC or Amex, available at most big supermarkets for about $505.95 each!

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Heh! I don't have a landline. Agreed, there are other modes of communication too.

About buying prepaid cards, I thought bonus points were not awarded when you buy such products. I can't recall where, but I think I saw at least one of the two - BCE & Sallie Mae - write it down somewhere. 

[Josh2942]

I think you guys are still taking this post in the wrong direction. I wasn't calling cell service a necessity that's why it was in quotes. My point was in the grand scheme of things our credit cards with AFs don't compare to what we spend it on. In retirement I'm pretty sure if you want to lve we'll. see the world and all that other movie crap. Our world is getting more and more expensive and who knows our whole monetary system could collapse (you finance people know what I'm saying) but in the end you need to have a lot of money put away. If your annual fee pays for itself then have it. If it doesn't don't have.